Haiti - Fourth Power Project : Credit 1527 - Project Agreement - Conformed

I 0 MEAL CREDIT NUMBER 1527-0 HA Project Agreement (Fourth Power Project) between INTERNATIONAL DEVELOPMENT ASSOCIATION and ELECTRICITE d'HAITI Dated , 1984 CREDIT NUMBER 1527-0 HA PROJECT AGREEMENT AGREEMENT, dated X I , 1984, between INTERNATIONAL DEVELOPMENT ASSOCIATION (hereinafter called the Association) and Electricit6 d'Halti (hereinafter called EdH). WHEREAS by the Development Credit Agreement of even date herewith between the Republic of Haiti (hereinafter called the Borrower) and the Association, the Association has agreed to make available to the Borrower an amount in various currencies equiva- lent to twenty-one million eight hundred thousand Special Drawing Rights (SDR 21,800,000), on the terms and conditions set forth in the Development Credit Agreement, but only on condition that EdH agree to undertake such obligations toward the Association as are hereinafter set forth; WHEREAS by a subsidiary loan agreement to be entered into between the Borrower and EdH, the proceeds of the Credit provided for under the Development Credit Agreement for the purposes of carrying out Parts A (3) and (4), B, C and technical assistance under Part A (1) and (2) of the Project will be made available to EdH on the terms and conditions therein set forth; and WHEREAS EdH, in consideration of the Association's entering into the Development Credit Agreement with the Borrower, has agreed to undertake the obligations hereinafter set forth; NOW THEREFORE the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01. Wherever used in this Agreement, unless the context shall otherwise require, the several terms defined in the Development Credit Agreement and in the General Conditions (as so defined) have the respective meanings therein set forth. ARTICLE II Execution of the Project Section 2.01. EdH declares its commitment to the objectives of the Project as set forth in Schedule 2 to the Development Credit Agreement, and to this end, shall carry out Parts A, B -2- and C of the Project described in such Schedule with due dili- gence and efficiency and in conformity with appropriate admini- strative, financial, engineering and public utility practices. Section 2.02. In order to assist EdH in carrying out Parts A, B and C of the Project, including the preparation and evalua- tion of bidding documents under Parts A and B of the Project, EdH shall employ consultants whose qualifications, experience and terms and conditions of employment shall be satisfactory to the Association, such consultants to be selected in accordance with principles and procedures satisfactory to the Association on the basis of the "Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency" published by the Bank in August 1981. Section 2.03. Except as the Association shall otherwise agree, procurement of the goods and civil works required for Parts A, B and C of the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of the Schedule to this Agreement. Section 2.04. (a) EdH undertakes to insure, or make adequate provision for the insurance of, the imported goods to be financed out of the proceeds of the Credit relent to it by the Borrower against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable by EdH to replace or repair such goods. (b) EdH shall cause all goods and services under Parts A, B and C of the Project financed out of the proceeds of the Credit relent to it by the Borrower to be used exclusively for the pur- poses of the Project. Section 2.05. (a) EdH shall furnish to the Association, promptly upon their preparation, terms of reference, plans, specifications, reports, contract documents and construction and procurement schedules for Parts A, B and C of the Project, and any material modifications thereof or additions thereto, in such detail as the Association shall reasonably request. (b) EdH shall: (i) maintain records and procedures adequate to record and monitor the progress of Parts A, B and C of the Project (including its cost and the benefits to be derived from -3- it), to identify the goods and services financed out of the pro- ceeds of the Credit, and to disclose their use in such Parts of the Project; (ii) enable the Association's representatives to visit the facilities and construction sites included in such Parts of the Project and to examine the goods financed out of the proceeds of the Credit and any relevant records and documents; and (iii) furnish to the Association at regular intervals all such information as the Association shall reasonably request con- cerning such Parts of the Project, their cost and, where appro- priate, the benefits to be derived from them, the expenditures of such proceeds and the goods and services financed out of such proceeds. (c) Upon the award by EdH of any contract for goods, works or services to be financed out of the proceeds of the Credit, the Association may publish a description thereof, the name and nationality of the party to whom the contract was awarded and the contract price. (d) Promptly after completion of Parts A, B and C of the Project, but in any event not later than six months after the Closing Date or such later date as may be agreed for this purpose between EdH and the Association, EdH shall prepare and furnish to the Association a report, of such scope and in such detail as the Association shall reasonably request, on the execution and ini- tial operation of such Parts of the Project, their cost and the benefits derived and to be derived from them, the performance by EdH and the Association of their respective obligations under the Project Agreement and the accomplishment of the purposes of the Credit. (e) EdH shall enable the Association's representatives to examine all plants, installations, sites, works, buildings, property and equipment of EdH and any relevant records and docu- ments. Section 2.06. EdH shall duly perform all its obligations under the Subsidiary Loan Agreement. Except as the Association shall otherwise agree, EdH shall not take or concur in any action which would have the effect of amending, abrogating, assigning or waiving the Subsidiary Loan Agreement or any provision thereof. Section 2.07. (a) EdH shall, at the request of the Asso- ciation, exchange views with the Association with regard to the progress of Parts A, B and C of the Project, the performance of -4- its obligations under this Agreement and under the Subsidiary Loan Agreement, and other matters relating to the purposes of the Credit. (b) EdH shall promptly inform the Association of --ay condi- tion which interferes or threatens to interfere with the progress of Parts A, B and C of the Project, the accomplishment of the purposes of the Credit, or the performance by EdH of its obligations under this Agreement and under the Subsidiary Loan Agreement. Section 2.08. EdH shall enter into an agreement with ODVA to regulate the use of the Artibonite river for irrigation, flood control and power generation on terms and conditions satisfactory to the Association. Section 2.09. EdH shall: (a) select the beneficiaries of fellowships on the basis of criteria, and under terms and condi- tions, satisfactory to the Association; (b) consult with the Association concerning the proposed training institutions for beneficiaries of fellowships; and (c) make arrangements, satis- factory to the Association, for the placeme*nt of such fellowship beneficiaries. ARTICLE III Management and Operations of EdH Section 3.01. (a) EdH shall aL all times carry on its operations and conduct its affairs in accordance with sound administrative, financial, and public utility practices under the supervision of qualified and experienced management assisted by competent staff in adequate numbers. (b) Without limitation on the provisions of paragraph (a) of this Section, EaH shall cause the positions of General Mana- ger, Technical Director, Planning Director, Administrative Direc- tor and Internal Auditor to be filled at all times by persons whose qualifications and experience shall be satisfactory to the Borrower, the Association and EdH. Section 3.02. EdH shall at all times operate and maintain its plants, machinery, equipment and other property, and from time to time, promptly as needed, make all necessary repairs and -5- renewals thereof, all in accordance with sound engineering, financial and public utility practices. Section 3.03. EdH shall take out and maintain with responsi- ble insurers, or make other provisions satisfactory to the Asso- ciation for, insurance against such risks and in such amounts as shall be consistent with appropriate practice. Section 3.04. EdH shall, not later than December 31, 1986, cause the Peligre Dam and related structures periodically to be inspected in accordance with sound engineering practices in order to determine whether there are any deficiencies in the condition of such structures, or in the quality and adequacy of maintenance or methods of operation thereof, which may endanger their safety. Section 3.05. Except as the Association shall otherwise agree, EdH shall not sell, lease, transfer, assign or otherwise dispose of any of its rights, property or assets except in the ordinary course of business. Section 3.06. EdH shall reduce its losses of produced energy to not more than: (a) 26% not later than September 30, 1985; (b) 22% not later than September 30, 1986; (c) 19% not later than September 30, 1987; and (d) 17% not later than September 30, 1988 and thereafter, and for such purposes shall take in a timely manner all necessary measures satisfactory to the Association. Section 3.07. EdH shall carry out a training program for its staff satisfactory to the Association. ARTICLE IV Financial Covenants Section 4.01. (a) EdH shall maintain records adequate to reflect in accordance with consistently maintained appropriate accounting practices its operations and financial condition, including, without limitation to the foregoing, separate accounts reflecting all expenditures on account of which withdrawals are requested from the Credit Account on the basis of statements of expenditures. (b) EdH shall retain, until one year after the Closing Date, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing the expenditures on account of - 6 - which withdrawals are requested from the Credit Account on the basis of statements of expenditure, and shall enable the Asso- ciation's representatives to examine such records. Section 4.02. EdH shall: (a) have its accounts and financial statements (balance sheets, statements of income and expenses and related statements) for each Fiscal Year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; (b) furnish to the Association as soon as available, but in any case not later than four months after the end of each such Fiscal Year: (i) certified copies of its financial statements for such Fiscal Year as so audited; and (ii) the report of such audit by said auditors, of such scope and in such detail as the Asso- ciation shall have reasonably requested, including, without limitation to the foregoing, separate opinions by said auditors in respect of the expenditures and records referred to in Section 4.01 (b) of this Agreement, as to whether the proceeds of the Credit and the Special Fund Credit made available to it and withdrawn from the Credit Account on the basis of statements of expenditure have been used for the purpose for which they were provided; and (c) furnish to the Association such other information con- cerning said accounts, financial statements, records and expendi- tures, as well as the audit thereof, as the Association shall from time to time reasonably request. Section 4.03. (a) Except as the Association shall otherwise agree, EdH shall earn an annual return of not less than 5 per cent in the Fiscal Years ending September 30, 1985 and 1986, not less than 7 per cent in the Fiscal Year ending September 30, 1987, and not less than 8 per cent in the Fiscal Year ending September 30, 1988 and thereafter of the average current net value of EdH's fi..ed assets in operation. (b) Before December 31 and June 30 in each of its Fiscal Years, EdH shall, on the basis of forecasts prepared by EdH and satisfactory to the Association, review whether it would meet the requirements set forth in paragraph (a) in respect of such Fiscal Year and the next following Fiscal Year, and shall furnish to the Association results of such review upon its completion. -7- (c) If any such review shows that EdH would not meet the requirements set forth in paragraph (a) for the EdH's Fiscal Years covered by such review, EdH shall promptly take all neces- sary measures (including, without limitation, adjustments of its power tariff structure and levels of its rates) in order to meet such requirements. (d) For the purposes of this Section: (i) The annual return shall be calculated by dividing EdH's net operating income for the Fiscal Year in question by one-half of the sum of the current net value of EdH's fixed assets in operation at the beginning and at the end of such Fiscal Year. (ii) The term "net operating income" means total operating revenues less total operating expenses. (iii) The term "total operating revenues" means revenues from all sources relating to operations. (iv) The term "total operating expenses" means all expenses relating to operations, including admini- stration, adequate maintenance, taxes and payments in lieu of taxes, and provision for depreciation on the basis acceptable to the Association, but excluding interest and other charges on debt. (v) The average current gross value of EdH's fixed assets in operation shall be calculated as one half of the sum of the gross value of EdH's fixed assets in operation at the beginning and at the end of the Fiscal Year, as valued from time to time in accordance with sound and consistently maintained methods of valuation satisfactory to the Association. (vi) The term "current net value of EdH's fixed assets in operation" means the gross value of EdH's fixed assets in operation less the amount of accumulated depreciation, as valued from time to time in accordance with sound and consistently maintained methods of valuation satisfactory to the Associa- tion. - 8 - Section 4.04. Except as the Association shall otherwise agree, EdH shall: (a) annually value its fixed assets in operation, to such extent as shall be necessary to reflect adequately, at the time of such valuation, the current value thereof, in accordance with a sound and consistently applied method of valuations acceptable to the Association; and (b) register, annually, the results of such valuation on its books. Section 4.05, Except as the Association shall otherwise agree, EdH shall not incur: (a) any long-term debt unless a reasonable forecast of the revenues and expenditures of EdH shows that the estimated net revenues of EdH for each Fiscal Year during the term of the debt to be incurred shall be at least 1.5 times the estimated debt service requirements of EdH in such Fiscal Year on all long-term debt of EdH including the debt to be incurred. For the purposes of this paragraph: (i) The term "long-term debt" means any indebtedness of EdH maturing by its terms more than one year after the date on which it is originally incurred. (ii) The term "net revenues" means the difference bet- ween: (A) the sum of revenues from all sources related to operations and net non-operating in- come; and (B) the sum of all expenses related to operations including administration, adequate maintenance, taxes and payments in lieu of taxes, but excluding provision for depreciation, other non-cash operating charges and interest and other charges on debt. (iii) The term "net non-operating income" means the difference between: (A) revenues from all sources other than those related to operations; and (B) expenses, including taxes and payments in lieu of taxes, incurred in the generation of revenues in (A) above. (iv) The term "debt service requirements" means the aggregate amount of repayments (including sinking fund payments, if any) of, and interest and other charges on, debt. -9- (v) The term "resonable forecast" means a forecast prepared by EdH not earlier than twelve months prior to the incurrence of the debt in question, which both the Association and EdH accept as reasonable and as to which the Association has notified EdH of its acceptability, provided that no event has occurred since such notification which has, or may reasonably be expected in the future to have, a material adverse effect on the financial condition or future operating results of EdH. (b) Any short term-debt, unless the aggregate of all short- term debt incurred by EdH, including the short-term debt to be incurred, but deducting, to the extent the Association is satis- fied therewith, cash and the cash value of negotiable instruments held by EdH, is equal to or less than one-sixth (1/6) of the operating, maintenance and administrative expenses (excluding depreciation and other non-cash provisions) of EdH for the twelve-month period preceding such incurrence. For the purposes of this paragraph the term "short-term debt" means all debt of EdH' for money borrowed, including bank overdrafts, maturing by its terms on demand or less than one year after the date on which it was incurred. (c) For the purposes of this Section, debt shall be deemed to be incurred: (A) under a loan contract or agreement or other instrument providing for such debt or for the modification of its terms of payment on the date of such contract, agreement or instrument; and (B) under a guarantee agreement, on the date Che agreement providing for such guarantee has been entered into. (d) Whenever for the purposes of this Section it shall be necessary to value, in terms of the currency of the Borrower, debt payable in another currency, such valuation shall be made on the basis of the prevailing lawful rate of exchange at which such other currency is, at the time of such valuation, obtainable for the purposes of servicing such debt, or, in the absence of such rate, on the basis of a rate of exchange acceptable to the Asso- ciation. Section 4.06. (a) EdH shall not, without the prior approval of the Association, undertake, prior to the completion of the Project, any investment in the power sector exceeding the equiva- lent of one per cent (1%) of the current net value of EdH's fixed - 10 - assets in operation nor permit the aggregate amount of unbudgeted village and rural electrification costs in any year to exceed 0.2% of such net value. (b) For the purposes of paragraph (a) of this Section, the term "current net value of fixed assets in operation" means the gross value of fixed assets in operation less the amount of accu- mulated depreciation, all as valued in accordance with Section 4.04 of this Agreement. Section 4.07. (a) EdH shall not use its resources for any purpose other than to pay the costs of its capital expenditures, total operating expenses and its debt service requirements. (b) For the purposes of this Section: (i) The term "capital expenditures" means all expen- ditures incurred on account of fixed assets, including interest charged to construction, related to operations. (ii) The term "debt service requirements" means the aggregate amount of repayments (including sinking fund payments, if any) of, and interest and other charges on, debt. (iii) The term "total operating expenses" means all expenses related to operations, including adminis- tration, adequate maintenance, taxes and payments in lieu of taxes, and provision for depreciation on the basis acceptable to the Association of the average current gross value of EdH's fixed assets in operation, but excluding interest and other charges on debt. (iv) The average current gross value of the Borrower's fixed assets in operation shall be calculated as one half of the sum of the gross value of the Borrower's fixed assets in operation at the beginning and at the end of the Fiscal Year, as valued from time to time in accordance with sound and consistently maintained methods of valuation satisfactory to the Bank. - 11 - (v) Whenever for the purposes of this Section it shall be necessary to value, in terms of the currency of the Borrower, debt payable in another currency, such valuation shall be made on the basis of the prevailing lawful rate of exchange at which such other currency is, at the time of such valuation, obtainable for the purposes of servicing such debt, or in the absence of such rate, on the basis of a rate of exchange acceptable to the Bank. Section 4.08. EdH shall maintain its liquid funds in interest-bearing accounts or in interest-bearing investments not exceeding six months to maturity. Section 4.09. The Prior Agreement is hereby amended by deleting the current wording in Sections 3.02, 3.05 (b), 4.03 and 4.05 of the Prior Agreement and replacing it by wording in Sec- tions 3.06, 3.04, 4.03 and 4.05 of this Agreement, respectively. ARTICLE V Effective Date; Termination; Cancel.ation and Suspension Section 5.01. This Agreement shall come into force and effect on the date upon which the Development Credit Agreement becomes effective. Section 5.02. (a) This Agreement and all obligations of the Association and of EdH thereunder shall terminate on the earlier of the following two dates: (i) the date on which the Development Credit Agreement shall terminate in accordance with its terms; or (ii) a date 20 years after the date of this Agreement. (b) If the Development Credit Agreement terminates in accordance with its terms before the date specified in paragraph (a) (ii) of this Section, the Association shall promptly notify EdH of this event. Section 5.03. All the provisions of this Agreement shall continue in full force and effect notwithstanding any cancella- tion or suspension under the General Conditions. - 12 - ARTICLE VI Miscellaneous Provisions Section 6.01. Any notice or request required or permitted to be given or made under this Agreement and any agreement between the parties contemplated by this Agreement shall be in writing. Such notice or request shall be deemed to have been duly given or made when it shall be delivered by hand or by mail, telegram, cable, telex or radiogram to the party to which it is required or permitted to be given or made at such party's address hereinafter specified or at such other address as such party shall have designated by notice to the party giving such notice or making such request. The addresses so specified are: For the Association: International Development Association 1818 H Street, N.W. Washington, D.C. 20433 United States of America Cable address: Telex: INDEVAS 440098 (ITT) Washington, D.C. 248423 (RCA) or 64145 (WUI) For EdH: Electricit6 d'Halti Port-au-Prince Boite Postale 1753 Haiti Cable address: Telex: ELECDHA 3490113 Port-au-Prince Section 6.02. Any action required or permitted to be taken, and any document required or permitted to be executed, under this Agreement on behalf of EdH may be taken or executed by its General Manager or such other person or persons as such General Manager shall designate in writing, and EdH shall furnish to the - 13 - Association sufficient evidence of the authority and the authen- ticated specimen signatureof each such person. Section 6.03. This Agreement may be executed in several counterparts, each of which shall be an original, and all collectively but one instrument. IN WITNESS WHEREOF, the parties hereto, acting through their representatives thereunto duly authorized, have caused this Agreement to be signed in their respective names in the District of Columbia, United States of America, as of the day and year first above written. INTERNATIONAL DEVELOPMENT ASSOCIATION By Regional Vice President Latin America and the Carribbean ELECTRICITE d'HAITI Byiv Authorized Representative - 14 - SCHEDULE Procurement A. International Competitive Bidding Except as provided in Part C hereof, goods and civil works shall be procured under contracts awarded in accordance with procedures consistent with those set forth in Sections I and II of the "Guidelines for Procurement under IBRD Loans and IDA Credits" published by the Bank in August 1984 (the Guidelines). B. Preference for Domestic Contractors In the procurement of works in accordance with the pro- cedures described in Part A of this Schedule, the Borrower may grant a margin of preference to domestic contractors in accord- ance with, and subject to, the provisions of paragraphs 2.55 and 2.56 of the Guidelines and paragraph 5 of Appendix 2 thereto. C. Other Procurement Procedures 1. Contracts for proprietary items under Part A (3) and (4) of the Project may be procured on a negotiated basis on terms and conditions satisfactory to the Association. 2. Contracts for works under Part B of the Project may be procured on the basis of extension of the existing contract for such works financed by the Association under the Third Power Project on terms and conditions satisfactory to the Association. D. Review by the Bank of Procurement Decisions 1. Review of invitations to bid and of proposed awards and final contracts: (a) With respect to each contract estimated to cost the equivalent of $50,000 or more, the procedures set forth in paragraphs 2 and 4 of Appendix 1 to the Guidelines shall apply. (b) With respect to each contract not governed by the preceding paragraph, the procedures set forth in paragraphs 3 and 4 of Appendix 1 to the Guidelines shall apply. - 15 - (c) The provisions of the preceding subparagraphs (a) and (b) shall not apply to contracts on account of which the Bank has authorized withdrawals from the Loan Account on the basis of statements of expenditure. 2. The figure 10% is hereby specified for purposes of paragraph 4 of Appendix I to the Guidelines. INTERNATIONAL DEVELOPMENT ASSOCIATION CERTIFICATE I hereby certify that the foregoing is a true copy of the original in the archives of the Interna- tional Development Association. In witness whereof I have signed this Certifi- cate and affixed the Seal of the Association thereunto the day of 198 FOR SECRETARY